Clean water business: public or private?

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The image of people waiting in line for each drop of clean water is clear evidence for the shortcomings in the management of this item. Photo: ST

Exclusive and "lucrative"?

Currently, clean water in Hanoi is being provided by five enterprises namely: Hanoi Water Limited Company (Hawacom); Ha Dong Water Limited Company, Fresh Water Business and Construction Investment Joint Stock Company (Viwaco), Duong River Surface Water Joint Stock Company and Da River Clean Water Investment JSC (Viwasupco).

According to some economic experts, clean water is a highly profitable product. Nguyen Si Dung, a public management expert and former Vice Chairman of the National Assembly's Office, said clean water was a "lucrative" market because if coffee could be drunk today or another day, travelling could be gone this year or another year, water or electricity, like rice and clothes, was anindispensable need, and almost unchanged.

Regarding the "lucrative" feature in the production and trading of clean water, Viwasupco’s financial report for the third quarter of 2019 showed its revenue and profit increased sharply, much higher than the annual profit plan. Specifically, the revenue increased 17 percent over the same period in 2018, at VND138 billion; the EAT increased 28 percent, reaching VND72 billion. In the first nine months, Viwasupco's revenue increased by 21 percent to more thanVND400 billion, while its profit after tax increased by 30 percent to nearly VND200 billion, much higher than the profit goalfor the whole year, which was VND75.5 billion.

In addition to Viwasupco, in the last two years, Hanoi Water Limited Company (Hawacom) produced a total 230 million m3 per year, equivalent to production capacity in excess of650,000m3 per day and night. In 2018, Hawacom achieved net profit of VND356 billion with an increase in profit margin of 19 percent.

Economic experts are also concerned about the monopoly in producing and supplying clean water. On the one hand, this is a specific commodity, not all businesses are capable of producing clean water. On the other, people sometimes cannot buy water even if they have money, they cannot choose their water supplier, and businesses cannot arbitrarily sell to the customers that they want to.In short, neither seller nor buyer has "self-determination" and the decision maker is the city government. The government decides which producers supply water to which areas, which means people in that area must use water from a specific supplier. Therefore, although the Da River’s water is polluted, people in areas using Da River water cannot buy water from other suppliers. Therefore, when answering the press in the days of Da River water crisis, even Minister of Natural Resources and Environment Tran Hong Ha said he and his family had sufferedthree days of dirty water.

Fair competition

According to many economic experts, clean water should be strictly controlled by the State but the management of clean water is "floating" when giving full authority to enterprises. Regarding the case that the Duong River clean water plant was bought by a Thai person, many experts suggested the State should review the conditional business list. Accordingly, it is necessary to restrict the transfer of some industries outside the Vietnamese border, particularly clean water. Some experts said clean water business should be kept in the conditional business list. Simultaneously, it is required to set standards and regulations for strict management when registering investment in clean water business.

In addition, to avoid the "floating" clean water business, Bui ThiAn, Director of the Institute of Natural Resources Environment and Community Development, said regulations on proving capital sources should be prescribed when investing in the production and trading of clean water.

According to An, once the legality of the capital is proved, every enterprise, regardless of economic sectors, can produce and supply clean water, on the basis of ensuring water quality. “The State will buy water from any business that meets those factors. There may be a number of focal points but there should be only one management and coordination agency,” said An.

Sharing the same opinion, Nguyen Si Dung said there should be the participation of private enterprises because if there was no competition for quality in the market of public services, the risk of quality assurance would be large. "Enterprises will put quality criteria below profits and the Da River incident may happen again," said the expert.

According to Dung, the monopoly of production and supply should be abolished and the principle of market economy, open and transparent bidding should be applied. When bidding, financial capacity should be checked to ensure the effective investment progress, said Dung.

Another expert, Nguyen Xuan Lai, Vice President cum General Secretary, Vietnam Water Supply and Environment Association, said although water was a specific type, it should not be given to only a few enterprises that leave people with no choice. Therefore, when an incident occurs, people only have two options, one is to stop using water and the other is to use unsafe water.

According to the Hanoi Water Supply Plan to 2030, vision to 2050 approved by the Prime Minister, it is forecasted that by 2030, Hanoi's water demand will reach 1,939,000 m3 per day and night; and reach 2,576,000 m3 per day and night by 2050. In particular, the water supply comes from three surface water plants including Da River, Red River and Duong River (supplied to Hanoi). The supply location and the goal of upgrading the capacity for the plants are also clearly defined.